They keep giving disappointing guidance. It's kind of stupid in the grand scheme of things.
The quarter that Apple reported last night was fine. Revenue grew 38%, Mac sales grew 41%, margins were good. Investors should be happy. Instead, Apple chooses to give guidance, and usually uses its guidance as a tool for keeping investor expectations at a reasonable level. Either that or they always think that business is going to suck next quarter.
The stock traded down 11% in the aftermarket last night, and this morning we have sound bites like to following:
"But Apple's projections in the current period left analysts wondering about continued Mac momentum..."
""The stock is plagued by high expectations," said Shaw Wu, an analyst for American Technology Research..."
"The company also told Wall Street analysts to expect lower gross margins and made a conservative sales estimate for the final quarter of the 2008 fiscal year..."
High-octane stocks are usually volatile around quarterly reporting, and volatility in itself is not a terrible thing. If you were looking for an entry point into Apple, today could be it.
I'm wondering whether Apple should even bother giving guidance. Lots of high-quality companies don't, and they could avoid the following main street conversation that will be happening at every Schwab office today:
Ed: "Wow, Apple is down 10%."
Sam: "Did they report earning last night?"
Ed: "Yeah, they must have missed."
Sam: "Do you think the Yankees have a chance without Posada?"
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